March 17, 2025

As more than 60,000 fans filed into The Summit League basketball tournament earlier this month, downtown Sioux Falls businesses were ready for them.

While the distance from the Denny Sanford Premier Center to the heart of Phillips Avenue is just over 2 miles, Downtown Sioux Falls Inc. aimed to make it feel even shorter this year, thanks to a shuttle service running between the basketball venue and the shopping, dining and entertainment options downtown.

“It was really, really well received,” said Brandon Hanson, who became CEO of DTSF earlier this year. “We got lots of wonderful comments … and foot traffic was certainly up. We saw a lot of traffic.”

This enhanced effort to drive business is a small but powerful example of what is likely to become a broader retail strategy for downtown.

Last year, a report commissioned by DTSF and produced by Greensfelder Real Estate Strategy and Leland Consulting analyzed the downtown retail market and made several recommendations.

“Sioux Falls needs to plan for what lies ahead. It needs to understand not just how retail looks today but more importantly the trends that will affect how it is likely to evolve in the next five to 10 years and beyond,” the report said.

“One goal of this report is to give stakeholders a guide, enabling them to discern shifts and foresee outcomes before they happen, so better, more informed planning decisions can be made.”

The broad analysis of the retail market was positive, the report found.

It noted Sioux Falls generally “punches far above its weight. Downtown contrasts with the otherwise suburban and rural environment, has a distinct sense of place and is the only area in town that is not primarily auto-oriented.”

Retail offerings downtown “are overwhelmingly independent merchants,” it said. “There are many eclectic boutiques and cafes that are welcoming, friendly and generally nice places to hang out. The dining scene rivals that of much larger places.”

Downtown is a specialty retail destination, largely relying on discretionary income and discretionary time, it added.

“In reality, we are selling an experience downtown,” Hanson said. “You’re getting something unique, special and different. The more bodies down here, the more exciting it is to look and the better the stores do when you can pop from shop to shop.”

Retail inventory in the Sioux Falls market has remained fairly steady for the past 15 years and is expected to stay steady for at least the next five years, according to the report.

“Asking rents and vacancy rates have also remained relatively constant over the same time horizon,” it said.

Overall, “there were a lot of things that were just confirmed” with the report, Hanson said. “It more confirmed what we envision for downtown rather than surprises.”

Block-by-block analysis

Downtown Sioux Falls overall generated 530,000 unique visitors, accounting for 1.8 million visits to its core Phillips Avenue retail blocks between Ninth and 12th streets last year. An additional 270,000 visits from 120,000 visitors were recorded in the 8th & Railroad Center retail area.

The report looked at key segments of downtown to analyze current and potential activity.

• Phillips, north of Seventh

The Cascade building block has grown from no activity to more than 230,000 visits in less than five years, with help from summer peaks. Within the area, the Jones421 Building sees peak visits on Fridays and Saturdays, with 118,000 total annual visits.

“Visits for this and other more northern blocks may be limited by lack of facing retail to the east,” the report said.

The Orpheum Theater Center, with 120,000 visits, showed the longest dwell time of any downtown block, averaging 127 minutes.

• Phillips, between Ninth and 10th

There were almost 600,000 annual visits here, split between the Phillips Avenue Diner block on the east side and Lewis Building block on the west.

• Phillips, between 10th and 11th

There was strong overall visitation, but it was lopsided with 113,000 annual visits to the Carpenter Building block on the west side, compared with 368,000 visits to the Shriver Square block on the east.

“The Carpenter Building block is attractive, with a diversity of specialty retail tenants but just one major activity destination, Carpenter’s bar, midblock with street-scaped outdoor seating,” the report said.

“Shriver Square block has a wide selection of four restaurants, a bar and a coffee shop to balance a complement of attractive professional office space, retail, services and outdoor seating.”

• Phillips, between 11th and 12th

This is the busiest stretch of Phillips but also lopsided with 585,000 visits along the Minervas block to the west and 175,000 visits last year to the State Theatre block on the east.

“The west side is bookended by popular dining and drinking options in Minervas and the Blarney Stone Pub, with two newer restaurants midblock and a variety of retail, services and office uses rounding out the block,” the report said. “Activity on the east side is limited somewhat by its more office-heavy mix.”

• 8th & Railroad area

“Retail, dining and showroom node springing up on the east side of the river near new and ongoing rail yard redevelopment projects. Emerging as a little edgier than Phillips, but that also makes it an interesting stretch,” the report said.

“Retail offerings are strongest in the area of home furnishings, with a well-merchandised mix of stores and showrooms amid restaurants and wine bars in the attractive multistory historical brick buildings.”

Moving forward

The overall report “gives a good use case for a mix of uses, a healthy mix between bars, restaurants, boutiques and service-based businesses,” Hanson said. “A slight tweak in that could change how the whole district feels.”

DTSF is “starting to dig into some of the retail marketing,” he continued.

“I think there’s capacity to do even more,” Hanson said, pointing to events like the Art & Wine Walk and Shop & Stroll that have benefited from limited temporary road closures.

That’s particularly key in areas like along Phillips between Sixth and Ninth streets, where a lack of pedestrian-friendly retail exists.

The report recommends that a redeveloped Wells Fargo block could be a mix of office, retail, residential and hospitality.

“The site is important from a location perspective and can help correct for the inactive frontages that are common along both Phillips and Main between Ninth and Fifth,” it said.

Additionally, while the Phillips Avenue Diner doesn’t represent an underutilization of its site, its dedicated parking is unnecessary with a ramp just feet away, the report said.

“The plaza could become a lovely pocket park that is as inviting as it presently is forbidding,” it added.

The Holiday Inn City Centre’s front parking lot represents another area of opportunity and “could be developed with retail that would serve the triple purpose of providing additional cash flow for the owner, additional retail space for market entrants and connectivity between downtown and Uptown as well as between Phillips and Main avenues,” the report said.

Farther north, the Raven Industries property “has the potential to act as connective ’tissue,'” the report said. “The site has the potential to be pivotal in creating an urban trail, the sort of public infrastructure known to be an economic development accelerator.”

Finally, the undeveloped parking lots along Phillips between Fourth and Fifth streets “have the potential to further connect Uptown and downtown, a key priority for the health of the overall area,” the report said. “That said, if the site were developed with all of the retail space that it is possible to build, that might oversaturate the market.”

Connecting all of Phillips Avenue as a retail-friendly corridor will take time, but it can be addressed in the short term with special events, Hanson said.

“It could be a decade of programming, but that’s incredible if we can get shoppers, residents and visitors to feel comfortable bouncing back and forth between historic downtown, Uptown and East Bank,” he said. “And it’s not far. It’s a five-minute walk, but it feels like a desert.”

The retail report will be used in combination with other master plans to develop DTSF’s one-, three- and five-year strategic plans as well as helping the organization work with current and prospective retailers, Hanson said.

“It helps tell the story for why downtown actually is the best place to live, work and play,” he said.